By The Auditor-General (AG) Ms Tsakani Maluleke has expressed overall satisfaction in the improvements made by the 6th administration to be able to transparently report their finances and performances in her 2023-24 general report for national and provincial departments, their entities and legislatures to Parliament’s Standing Committee on Public Accounts (Scopa).
Maluleke called on the current administration to build on the improvements of the previous administration which achieved improved audit outcomes. She said all provincial legislatures except for one achieved clean audits.
Though there are some marked improvements in both national and provincial governments, Tsakani Maluleke says there is still a long way to go in achieving the required or expected standard. According to the AG, the audit outcomes of the legislature sector improved significantly from 2018-19, showing a net improvement of 60%. Parliament and eight of the provincial legislatures now have clean audits, setting an example for other sectors.
The positive trajectory is worth copying and followed by the 7th administration, Maluleke encouraged auditees who are still struggling with unqualified audit opinions with findings to work harder to achieve clean audit outcomes.
“Just over 40% of auditees obtained an unqualified audit opinion with findings. This is not a desirable outcome and auditees should not remain comfortable in this category as they currently do. Even though their financial statements might be unqualified (often due to corrections made based on our findings), the material findings on performance mean that their performance reports are not credible and the material findings on compliance signal a disregard for legislation or significant lapses in control. They could easily lose the unqualified status due to these remaining challenges in their control environment,” cautioned Maluleke.
Maluleke attributed the improvements to the Offices of the Premier and CoGTA in making sure that their departments and municipalities do the much needed hard work to achieve clean audits, report on time and exercise transparency.
She also applauded the efforts of national and provincial governments to professionalise parts of their departments, which helped in improved audit outcomes; though more professionals are needed, the improvement is impressive and a step in the right direction.
The Western Cape has the highest number of clean audits. The AG noted that the number of clean audits continues to increase every year due to significant effort and commitment by the leadership, officials and governance structures of these institutions.
She re-emphasised the importance of clean audits, which show that an auditee’s financial statements and performance report give a transparent and credible account of its finances and its performance against the targets that had been set.
It also means that the auditee had complied with the important legislation that applies to financial and performance management. This enables everyone with an interest in the auditee – particularly those who need to oversee its performance and provide support for it to succeed – to determine if the auditee is addressing citizen needs and delivering services.
“A clean audit is not always an indicator of good service delivery,” the AG explained.
“However, a clean audit positions an auditee to transparently communicate to citizens on whether and when their needs will be met through accurate records, which also enables informed decisions by the different role-players in the accountability ecosystem.
We have seen that auditees with institutionalised controls and systems to plan, measure, monitor and account for their finances and performance, and to stay within the rules, often also have a solid foundation for service delivery to the people of South Africa,” she said.
Maluleke commended the 142 auditees (63 departments and 79 public entities) that achieved clean audits in 2023-24. Collectively, they managed R266,28 billion (13%) of the R2,07 trillion expenditure budget in national and provincial government
She highlighted 65 of these 142 auditees, as they have managed to sustain their clean audit status over the administrative term through practices such as institutionalising and monitoring key controls (including preventative controls), and by having all role-players in the accountability ecosystem committed to fulfilling their monitoring, governance and oversight roles.
She further acknowledged the 39 auditees that are very close to obtaining a clean audit, and only need to address one finding on either the quality of their financial statements or on their performance reporting.
“An auditee will often find it difficult to sustain a clean audit if it does not have financial and performance management systems that operate consistently and effectively and controls that are properly embedded,” said AG Tsakani Maluleke.
